The importance of analytical tecniques

When an analyst, business executive, or student is dealing with a financial issue, or wishes to understand the financial implications and economic trade-offs involved in decisions about business investment, operations, or financing, a wide variety of analytical techniques—and sometimes rules of thumb—is available to generate quantitative answers. Selecting the appropriate tools from these choices is clearly an important part of the analytical task. Yet, experience has shown again and again that first developing a proper perspective for the problem or issue is just as important as the choice of the tools themselves.
Therefore, here I not only want to presents the key financial tools generally used, but also explains the broader context of how and where they’re applied to obtain meaningful answers. To this end, it's important to have a clear idea of conceptual backdrop both for the financial/economic dimensions of systematic business management and for understanding the nature of financial statements, data, and processes underlying financial analysis techniques. All subjects are viewed in the context of creating shareholder value—a fundamental concept for any business executive, student or consultant.
While the tools and techniques covered in this book are discussed and demonstrated in detail, the user must not be tempted to view them as ends in themselves. It’s simply not enough to master the techniques alone! Financial/ economic analysis is both an analytical and a judgmental process which helps answer questions that have been carefully framed in a managerial context. The process is at its best when the analyst’s efforts are focused primarily on structuring the issue and its context, and only secondarily on data manipulation. We can’t stress enough that the basic purpose of financial analysis is to help those responsible for results to make sound business decisions within a relevant cash flow framework.